Historical data: Crypto market bullish momentum will continue until after the US election

Author: James Van Straten, Helene Braun, Coindesk; Translated by Wuzhu, Golden Finance

Summary

• Over the past decade, Bitcoin's average return in the second half of October was twice that of the first half.

• The options market has shown a bullish bias for November and December expiration dates.

• The US election has the biggest impact on Dogecoin and Cardano ADA.

With less than three weeks to go until the US presidential election, traders are preparing for what will happen after November 5 and how the new administration will respond to factors affecting financial markets, including cryptocurrencies.

Cryptocurrencies have been on an upward trend over the past week, with China's stimulus measures, interest rate cuts by Western central banks, and perhaps the US election becoming a clearer focus among the reasons for the recent rise.

While cryptocurrencies only really became popular assets during this past (2020) presidential election, the second half of October typically marks the start of a bullish period for financial assets like stocks, so perhaps cryptocurrencies’ recent moves aren’t unusual.

In fact, Bitcoin’s (BTC) performance, according to Coinglass data from 2013 to 2023, shows that the second half of October (16-31) delivered twice the returns of the first half (1-15).

(Source: Coinglass)

Election Impact

Data from ETC Group, a subsidiary of Bitwise Asset Management, shows that token prices are uncertain due to the election results.

ETC Group used a comparison of implied performance and theoretical values ​​to find that Bitcoin could rise 10% in either direction depending on the election results. Given that the current spot price is just below $68,000, a 10% increase would mean a new high, exceeding $73,697 in March. The team also found that the impact of the election may have the greatest impact on Cardano (ADA) and Dogecoin (DOGE), which rose by 18% and 20% respectively.

(Source: Bloomberg, Coinmarketcap, ETC Group)

In addition, Ycharts data shows that in presidential election years since 1950, the stock market tends to bottom out in September and/or October and then rebound in November. So far, this is what we have seen in the S&P 500 and Nasdaq, which have both risen since the beginning of last month.

(Source: Optimisticallie, YCharts)

Beyond the US election, the options market shows a bullish bias for Bitcoin, with the majority of bullish open interest at the $70,000 and $80,000 strike prices. The strike prices for the November 29 expiration are $141 million and $120 million notional values, respectively.

The bullish bias is more pronounced for the Dec. 27 expiration, with the majority of open interest in call options settled at a $100,000 strike price, with a notional value of more than $620 million, according to Deribit.

“As the U.S. election approaches, with Trump the most likely candidate and Harris looking good even from a digital asset perspective, the broader digital asset ecosystem does look increasingly likely to go mainstream,” Geoffrey Kendrick, global head of digital asset research at British multinational bank Standard Chartered, wrote in a note on Tuesday.

“For BTC, this means that Bitcoin is likely to rise to its all-time high of $73,000 before the election.”